It’s a reasonably sweet world out there for doughnut chains such as Dunkin Donuts, Krispy Crème and Mad Over Donuts.
With relatively lesser competition in the segment — compared to pizza and burger chains — the players are looking to expand their operations and step up investments in Indian metros.
Singapore-based Mad Over Donuts (MOD) is investing in a 700-sq ft outlet opposite Churchgate Station in south Mumbai. Krispy Crème will soon be opening doors at another south Mumbai location with a 400-sq ft outlet at Phoenix City Mall at Lower Parel.
For industry pioneer MOD, the new launch would be its 56th in the country. It plans to add 10-12 outlets every year and go pan-India. Its strategic investor and partner Mirah Hospitality shares its optimism on the doughnut segment.
“Indians have a sweet tooth and it is only after we introduced the eggless vegetarian doughnuts did more players like Dunkin Donuts decide to enter the market. Today there is less competition among doughnut retail chains compared to bigger and more saturated categories like pizzas and burgers,” said Mirah Hospitality MD Gaurav Goenka.
The players have arrived at the mantra to derive better revenue-rental ratios in the category, which is still nascent in India: keep it small.
“Doughnut players prefer mid-sized and smaller outlets which serve as takeaway joints, as it helps in getting better rental-revenue ratios,” said Tarak Bhattacharya, Chief Operating Officer of MOD.
“It may be a slow market, but doughnuts are growing ahead of burgers and pizzas.”
Krispy Crème, brought in by master franchisee Citymax of the Landmark Group, is also scaling up while trying to keep low overheads.
Adopting a hub-and-spoke model, the smaller outlets are serviced by a larger kitchen-based outlet to keep low costs in expensive real estate markets like Mumbai.
“Today we have 25 outlets measuring between 400 and 500 sq ft. There are plans to have 80-100 outlets in the next four years. We have to expand fast as the number of outlets today does not cover our overhead costs,” said Citymax President Vishal Kapur.
Low price Meanwhile, Dunkin Donuts, which also sells burgers and coffee, believes the low price of doughnuts boosts sales, compared to the other categories at its stores.
Having entered the category relatively late, it is now trying to catch up, opening 30 outlets this year. “Doughnuts can be had both as a snack and as a desert, and is more affordable than a burger or pizza. We will now bring in innovation with India-centric offerings in this category,” said Dev Amritesh, President and COO of Dunkin Donuts.